The NZD/USD pair continues its downward trajectory for the fourth consecutive session, trading near 0.5640 during European hours on Thursday. The New Zealand Dollar (NZD) faces pressure as markets price in another 50 basis point (bps) rate cut by the Reserve Bank of New Zealand (RBNZ) on February 19, following two previous reductions.

New Zealand’s trade surplus expanded to NZ$219 million in December, supported by a 17% surge in exports, outpacing a 6.5% rise in imports. However, weak economic indicators, including a sharp drop in ANZ Business Confidence to a five-month low of 54.4, highlight concerns over slowing growth.

Traders focus on the upcoming US Q4 Gross Domestic Product (GDP) report, which is expected to show an annualized slowdown to 2.6% from 3.1%. Inflation concerns persist, with the Q4 GDP Price Index projected to rise to 2.5% from 1.9%, potentially supporting the US Dollar (USD).

In its January meeting, the Federal Reserve (Fed) reinforced its cautious stance by maintaining rates at 4.25%-4.50%. Fed Chair Jerome Powell emphasized that policy changes depend on clear inflation progress or labor market weakness, bolstering USD demand.

Trade Idea:

Consider selling NZD/USD below 0.5625, targeting 0.5580, with a stop-loss at 0.5655.